Despite Lobbying, Popular Opposition Sinks Bailout Bill

Not long after the administration decided to pursue a massive bailout plan, there were reports of a massive lobbying effort. Lobbyists for financial institutions were “swarming,” the New York Timesreported. It was a “feeding frenzy,” reportedUSA Today. Government watchdogs noted how the financial services industry had lawmakers firmly in its pocket after years of fetes and ample contributions.

But yesterday, the votes weren’t there. And in today’s post mortems on the bailout bill’s surprising failure yesterday, much of the blame seems to focus on the bill’s lack of real popular support.

But there was lobbying against it. On the Democratic side, “AFL-CIO President John Sweeney, who is bankrolling campaigns to aid Democratic candidates, condemned the plan.” On the Republican side, “influential conservative groups such as the Club for Growth and FreedomWorks called for its defeat.”

Meanwhile, by all accounts, lawmakers’ offices were bombarded by phone calls from constituents urging against the idea. Rep. Nick Lampson (D-TX), who’s facing a tight re-election battle, says his calls were 15-1 against the bill. He voted no.

Lawmakers were wary of going out on a limb to vote for an unpopular bill that none of the party leaders enthusiastically supported. The AP focuses on the 19 most vulnerable House lawmakers and finds that 13 of them voted against the bill, reporting that “lawmakers who had the most to lose risked the least on Monday.” As one GOP lawmaker said, “People’s re-elections played into this to a much greater degree than I would have imagined.”

Those 13 crucial votes notwithstanding (the vote failed by 12), the vast majority of the 228 votes against the bill came from politically safe districts. According to a breakdown by the New York Times, 111 Republicans from “strong Republican districts” and 83 Democrats from “strong Democratic districts” voted no.

Ideological objections then could be said to account for the vast majority of the opposition. The bill “offered citizens from across the ideological spectrum a little something to hate,” as the Washington Postputs it.

Some lawmakers are not convinced that a crisis is actually at hand. Liberals objected to the lack of foreclosure provisions in the bill, among other things; conservatives objected to the idea of a massive government intrusion.

The question remains of how the bill might finally work its way through Congress if the bill remains so unpopular. The way forward is unclear—although the rebound of the stock markets this morning indicates that traders seem assured a bill will eventually pass. As House Minority Leader John Boehner says, “It’s really amazing we got as many votes as we got.”

4 comments

“Here, in this shattering new interview, Stephen Spoonamore goes into harrowing detail about the Bush regime’s election fraud, past, present and—if we don’t spread the word right now—to come. Since he’s the only whistle-blower out there who knows the perps themselves, and how they operate, we have to send this new piece far and wide.” (Rawstory.com)

The core concept proposed by Bush is flawed. Call some hearings and ask some economists. Google Sweden 1992 banking crisis. They had good success promptly steering their financial institutions back to safety. Learn the lessons, write it for the Democratic base, and own it. The “compromise” tweeking that was done to the Bush proposal resulted in a toothless and weak 100 page bill that tried to bury and hide its weakness from the voters. Rather than condescendingly claiming that the American people didn’t understand (Cf, McSame of Obama at first debate), or that the leadership didn’t explain it well enough, the reality is that public outrage finally made the Republicans blink, to borrow from Palin. If they vote in favor of bailing out the bad actors, they lose votes from constituents in five weeks at the next election. That is their only moral hazard. The bill that failed would not have prevented one of the 10K daily foreclosures, could have been filibustered until Bush spent all $700B, would only have made some parachutes non-tax-deductible, merely required a report “suggesting” how the taxpayer will be paid back, and allowed the same bunch of lobbyists to set prices for their trash that the taxpayers would pay. As a final insult, instead of providing more confidence through transparency, the failed bill would allow Paulson to suspend the mark-to-market rule. This is intellectual dishonesty that will further erode confidence in our banking system. Do a better job on all these issues and allow bankruptcy judges to implement the rewriting of loans, or face the wrath of the voters. I think many voters would accept a temporary governmental equity position in the banking sector as long as the bad guys aren’t seen as maintaining their ability to subvert the programs and continue to rip off the system. Don’t pull another FISA cave.

Both Mr Kiel & Mr Spix analyze what is wrong with the Paulson bail-out. Mr Spix states the elements which will be necessary & essential to negotiating & writing legislation to replace the uber opaque Paulson bail-out.
Transparency & equity for all of the people of the USA is completley absent from the Paulson proposed bail-out & the jury rigged modifications of Paulson’s rip-off, swindle, grab for power. At the risk of being seen as advocating throwing out the baby with the bath water. Both Secty of Treasury Paulson & his ideas for the so called bail out must be taken off the table. Paulson must be seen as a participant in & beneficiary of the orgy of deregulation which brought on the melt-down which started on 9/15/08 & is bound to get worse.
Participants in the deregulation orgy & those who made obscene amounts of money from it won’t be trusted. Mr Paulson has earned the nick name of Hanky-Panky for his exploits as an ‘investment’ banker. He waxed rich in the private sector. To be brief-there is no reason to trust him or any of W’s cohorts in crime.
Mr Spix gives us some of the reasons not to trust Hanky Panky Paulson or W & Co. It isn’t a complete catalog but it’s a very good start.
The denizens of K St won’t get it, the money or the reasons why none of Paulson’s cohorts will be granted any power when & if legislation is drafted & becomes law which might lead to a recovery from the melt down & its consequences which doesn’t require Joe & Joan Sixpaq to be the only ones to pay to fund our long & most expensive attempt to recover from the orgy of deregulation. New stringent regulations on banks & the financial market must be drafted, made into law & enforced by people not of the ilk of Paulson & the denizens of K St. This ends my ramble.

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